I like playing make-believe with my daughters. Playing make-believe at home with children is perfectly fine.
But Speaker of the House Nancy Pelosi is playing a game of make-believe in Congress, and the California Democrat is playing a game of life and death. Pelosi is pretending that her speaker’s gavel is a magic wand that can magically change reality. Someone needs to remind Pelosi that her gavel isn’t magic before American consumers suffer the consequences.
Recently, Pelosi introduced a drug-pricing bill. While it will undoubtedly offer good political messaging for her campaign, as far as the policy itself is concerned, Pelosi’s plan is only notable for its lack of grasp of reality and amazing rejection of reason. For instance, she includes what is ostensibly a 95% tax on companies for not playing her game of make-believe.
The bill forces pharmaceutical companies to accept government price controls on a large swath of common medicines. If the companies do not go along with Pelosi’s game, then they would be forced to pay retroactive taxes on those drugs. This is where the up to 95% tax comes into play.
Government mandates aren’t how drug prices are lowered in the long-run. The only thing that setting prices does over time is assure that fewer new drugs will be created and that less money will be spent on research and development. Pennies will be pinched, jobs lost, quality forgone, and fewer people will benefit from the new and innovative drugs that come out every year.
Thankfully, Pelosi’s drug plan isn’t going to pass. However, the voter miseducation that her drug plan creates, the ignorance of the market that it demonstrates, and the waste of time that it represents should frustrate everyone.
Additionally, we must worry about the market implications that the mere introduction of such a top-down, command-and-control piece of legislation from someone as powerful as the speaker puts in motion. Such a bill inevitably causes concern and confusion. Businesses don’t react well to uncertainty, so it is possible that even due to the mere introduction of this bill, fewer drugs will be created.
My family is one of thousands, if not millions, that has benefited from some of the recent advancements in pharmaceuticals (and thank goodness they’re real advancements and not make-believe). And almost everyone has benefited from one of the commercialized drugs for which we can thank the free market.
What if those drugs had never been taken to market? What if money wasn’t spent in research and development? What if instead of developing new drugs, drug companies just sat back and waited for other countries to innovate? Under Pelosi’s plan, a handful of already developed drugs might become cheaper but the cost to future developments and breakthroughs would be devastating.
Make-believe is supposed to be all fun and games. But when Congress is dealing with life-and-death issues, Pelosi should put away her imaginary magic wand and focus on real solutions.
Charles Sauer (@CharlesSauer) is a contributor to the Washington Examiner‘s Beltway Confidential blog. He is president of the Market Institute and previously worked on Capitol Hill, for a governor, and for an academic think tank.
